Market Remarks

Morning Notes – Monday, December 6, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; moving within a congestion zone around 4550.00 level
  • The odds are for an up day with elevated volatility – watch for a break below 4531.50 for a change of sentiments
  • No key economic data report due during the day:

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend Under Pressure
  • 120-Min: Down
  • 30-Min: Down-Side
  • 15-Min: Down-Side
  • 6-Min: Side

Key Levels:

  • Critical support levels for S&P 500 are 541.60, 4503.97, and 4495.12
  • Critical resistance levels for S&P 500 are 4565.00,4608.03, and 4617.47
  • Key levels for E-mini futures: break above 4571.75, the high of 4:00 AM and break below 4531.50, the low of 5:30 AM

Pre-Open

  • On Friday at 4:00 PM, S&P futures (December 2021) closed at 4537.25 and the index closed at 4538.43 – a spread of about +1.25 points; futures closed at 4537.50 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are mixed – at 8:45 AM, S&P 500 futures were up by +16.00; Dow up by +219; and NASDAQ down by -28.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Tokyo, and Mumbai closed lower; Sydney, Seoul, and Singapore closed higher
  • European markets are higher
  • Currencies (Compared to two weeks ago):
    Up Down
    • Dollar index
    • EUR/USD
    • USD/CAD
    • INR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are lower
    • Precious metals are lower
    • Industrial metals are lower
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • 10-years yield closed at 1.377%, down -15.9 basis points from two weeks ago;
    • 30-years is at 1.703%, down -20.4 basis points;
    • 2-years yield is at 0.595%, up +7.8 basis points;
    • The 10-Year-&-2-Year spread is at 0.782, down from 1.019
    • The 30-Year-&-10-Year spread is at 0.326, down from 0.371
  • VIX
    • At 29.70 @ 8:15 AM; down from the last close; above 5-day SMA;
    • Recent high = 35.32 on December 3; low =  16.03 on November 16
    • Sentiment: Risk-On-Neutral

The trend and patterns on various time frames for S&P 500:

Monthly
  • November 2021 was a Shooting Star candle at all-time highs; watch for a close below November’s lows;
    • Stochastic (9, 1, 3): %K crossed below %D; from near 100; %D Bearish Divergence
    • RSI-9 is turning down from above 75; Bearish Divergence
    • Above the upper band of a 120-month regression channel;
  • Confirmed Uptrend: sequence of higher highs and higher lows
Weekly:
  • The week ending on December 3 was a red spinning top candle following a large Bearish Engulfing candle
    • Stochastic (9,1, 3): %K is below %D; near 55
    • RSI-9 is just above 50
  • The week was down -56.19 or -1.2%; the 5-week ATR  is 117.74
  • A down week; third in the last five weeks, and fourth in the previous ten weeks
  • The weekly pivot point=4568.83, R1=4642.55, R2=4746.66; S1=4464.72, S2=4391.00; S1 pivot level was breached
  • At/below 10-week EMA; above 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A red candle with a larger lower shadow that breached the previous day’s low;
    • Stochastic (9, 1, 3): %K crisscrossing %D lower
    • RSI-9 is trending down in steps; below 8-day EMA
  • Below 20-day EMA; At/below 50-day EMA; above 100-day SMA, and 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • The sequence of lower lows and lower highs since November 22; Broke below a horizontal channel between 4711.00 and 4625.00 – made a low of 4492.00 on Friday near 161.8% extension target
    • RSI-21 is moving between 50 and 40
  • At/below EMA20, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (E-mini futures)
  • Moving between 4600.00 and 4500.00 since 2:30 PM on December 1
    • RSI-21 moved around 50
    • A/below EMA20, which is at/below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving sideways since 10:30 PM
  • The Bollinger Band is slightly expanded with price moving along the middle band
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 80
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mostly lower on Friday, December 3, in mixed volume. Dow Jones Transportation Average closed higher. Dow Jones Industrial Average and Transports traded in lower volume. Major indices opened higher but then immediately turned down and traded sharply lower before recouping some of the losses in the last hour of trading.

For the week, major US indices closed lower in higher volume. Markets in Asia and Europe closed mixed. The dollar index was up, most hard commodities were down, and the soft commodities were mixed. The US Treasury yields closed down.

From Briefing.com:

The major averages finished the week on an uninspiring note with the Nasdaq (-1.9%) pacing a daylong retreat while the S&P 500 (-0.8%) and Dow (-0.2%) recorded slimmer losses. The three indices lost a respective 2.6%, 1.2%, and 0.9% for the week.

Small caps fared even worse with the Russell 2000 (-2.1%) falling 3.9% for the week.

[…]

Eight sectors ended the day in negative territory with three losing 1.0% or more. The consumer discretionary sector (-1.8%) finished at the bottom of the leaderboard, right behind technology (-1.7%) and financials (-1.5%).

[…]

Treasuries faced some selling during the first hour of trade, but they reversed higher as stocks surrendered their starting gains. The 10-yr yield fell 11 basis points to 1.34%, reaching its lowest level since late September.

In commodities, crude oil fell $0.26, or 0.4%, to $66.38/bbl, surrendering $1.79, or 2.6% for the week.

[…]
  • November nonfarm payrolls increased by 210,000 (Briefing.com consensus 525,000). The 3-month average for total nonfarm payrolls decreased to 378,000 from 469,000 in October. October nonfarm payrolls revised to 546,000 from 531,000. September nonfarm payrolls revised to 379,000 from 312,000
  • […]
  • The ISM Non-Manufacturing Index for November increased to a record high 69.1% (Briefing.com consensus 65.0%) from 66.7% in October. The dividing line between expansion and contraction is 50.0%. The November reading marks the 18th straight month of growth for the services sector
  • […]
  • The IHS Markit Services PMI rose to 58.0 in the final reading for November from 57.0 in the preliminary reading but was down from October’s final reading of 58.7
  • Factory orders for manufactured goods increased 1.0% m/m in October (Briefing.com consensus +0.4%) following an upwardly revised 0.5% increase (from 0.2%) in September. Shipments of manufactured goods jumped 2.0% after increasing 1.0% in September
[…]
  • S&P 500 +20.8% YTD
  • Nasdaq Composite +17.1% YTD
  • Dow Jones Industrial Average +13.0% YTD
  • Russell 2000 +9.3% YTD
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